Tag Archives: Yantar

Difficult Course to a Grand Fleet

Konstantin Bogdanov sees reason for pessimism when looking at the course ahead for rebuilding Russia’s fleet.  Writing in Friday’s Nezavisimoye voyennoye obozreniye, he says, despite an intention to spend 4.7 trillion rubles of the ten-year GPV on the Navy, there are technical challenges, clearly impractical schemes, and failures in what he calls the “organization-financial plan” ahead. 

Bogdanov provides us a handy review of the state of Russian shipbuilding.

He points first to OSK’s insistence on seeing new aircraft carriers (with nuclear-powered destroyers in their battle groups) on the Russian Navy’s horizon.  But Defense Minister Serdyukov has only a cold rebuff for the idea.  Early R&D into what a new carrier might look like is as far as he’s being willing to go.  It was made pretty clear that a carrier isn’t part of this GPV.

Bogdanov says OSK may be looking for work for the New-Admiralty Wharves it sees on Kotlin Island in the future.  The 30- to 60-billion-ruble shipyard could be ready in 2016.  An aircraft carrier project would help launch this idea.

Then Bogdanov turns to the Navy’s more immediate needs — frigates and corvettes.  

Proyekt 22350 frigates are needed by tens, if not 30, or even 40, of them.  But Northern Wharf is having trouble building them.  Lead unit Admiral of the Fleet of the Soviet Union Gorshkov was five years in construction, and its underway testing isn’t complete.  Fleet Admiral Kasatonov was laid down just about two years ago.  Its SAM system, Poliment-Redut with 9M96 missiles isn’t ready, and will have to be fitted right to finished frigates.  But Bogdanov sees the frigates’ VLS — the Multipurpose Ship Fire System (UKSK or УКСК) as a positive step.  It could fire antiship, antisubmarine, land-attack cruise missiles, torpedoes, and possibly SAMs.

When proyekt 22350 didn’t come along quickly, Bogdanov says, the Navy went for its own proyekt 11356M frigates like those being built for India.  But, he notes, Baltic Shipbuilding Plant “Yantar” in Kaliningrad isn’t having an easy time constructing them for its Indian and Russian customers.  There are delays in the Indian units, but Admiral Grigorovich and Admiral Essen have been laid down for Russia, and Admiral Makarov should join them soon.  The contract for a second batch of three was just signed.  They’re supposed to be “localized,” but may actually be more like the Indian versions.  They’re slightly cheaper than the proyekt 22350 at 10 billion vs. 16 billion rubles per ship.

Northern Wharf has the order for nine proyekt 20380 Steregushchiy-class corvettes (with the proyekt 22350 frigates this comes to more than 220 billion rubles).  Soobrazitelnyy (proyekt 20381) began sea trials this year, Boykiy was launched, Stoykiy is under construction, and Provornyy (proyekt 20385) was laid down.  Sovershennyy (proyekt 20380) remains under construction at Komsomolsk-na-Amure.  Bogdanov says the proyekt 20385 ships will have an eight-cell UKSK.

Bogdanov notes, however, that Northern Wharf’s production won’t be steady until its ownership issue is finally resolved.  If OSK takes over, this could have a good or bad effect on fulfilling defense orders, but the current financial questions around Northern Wharf are even worse.

Turning to submarines, Bogdanov believes the situation is more transparent, but there are still questions.

The SSBN picture is pretty clear.  Proyekt 955 Borey-class SSBNs finally have a missile that looks like it works.  Yuriy Dolgorukiy has fired it, and Aleksandr Nevskiy might this year.  Vladimir Monomakh is under construction, and they’re preparing production materials for Saint Nikolay.

The problem, he notes, is units 1 and 2 used sections and components of proyekt 971 and 949A submarines never built.  Units 3 and 4 will be built from scratch, and it’s too early to say how this will be reflected in their cost.  Bogdanov concludes another battle over inflated prices awaits, and there is, of course, still no 2011 contract with Sevmash.

It’s less clear with the multipurpose proyekt 885, Yasen-class, of which the Navy wants ten by 2020.  But these boats have been the focus of the Defense Ministry’s familiar complaint about unjustified price increases.  Unit 1 Severodvinsk was built from materials and resources on hand, and its rising price was frozen at 47 billion rubles in 2005.  The Defense Ministry says Sevmash wants 112 billion for unit 2 Kazan

Bogdanov thinks it’s hard to tell who’s justified here.  There is structural industrial inflation, and a higher costs could be the result of the frozen handover price on Severodvinsk.

Bogdanov mentions the thought given to cheaper attack boats like the Victor III or Akula, or proyekt 957 Kedr which never left the design phase.  The Yasen is intended to replace Soviet-era SSNs and SSGNs, but Bogdanov thinks it’s too complex and expensive to be built in the numbers Russia may need.  Twenty years ago the Russian Navy was planning for not less than 30 [sized of course against the U.S. fleet], and currently it has not more than 30 SSNs and SSGNs, and this is considered insufficient. 

Despite the uncertainty above, Bogdanov says one still hears talk about the need to develop a fifth generation submarine, but it’s unknown if there will be any development work on one.
 
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The GOZ Last Week (Part I)

Let’s start with the news.  In short, Defense Minister Serdyukov told the press all GOZ-2011 contracts, except ones with OSK, were signed.  But most news outlets concluded he failed to meet Prime Minister Putin’s August 31 deadline for finishing the contracting process.

ITAR-TASS reported the Defense Ministry signed its fourth contract with OSK on August 29.  It was with Baltic Shipbuilding Factory “Yantar” for three Proyekt 11356M frigates.  Kommersant reported others are with Admiralty for three Proyekt 636 diesel-electric submarines and with Zvezda Shipyard in the Far East for nuclear submarine (probably OSCAR II-class) repairs and modernization.

But the largest and most important contracts with Sevmash for Proyekt 955 Borey-class SSBN and Proyekt 885 Yasen-class SSN production are still not signed.  The contract is supposed to cover two of the former and one of the latter that are already (or almost) complete.  Kommersant says the contracting delay means a fourth 955 and second 885 won’t be laid down until sometime in 2012.

ITAR-TASS concluded there are still differences over pricing although there is progress in the negotiations.  The wire service writes that Sevmash refuses to make concessions taking below a minimum profitability level, while the Defense Ministry calls price increases unjustifiable, and says it will only pay for concrete items regardless of the producer’s profitability.

On September 1, ITAR-TASS reported Serdyukov’s announcement that, on the whole, the Prime Minister’s order to conclude all GOZ contracts had been fulfilled.  It provided some choppy, weaseling quotes from Serdyukov:

“We are reprogramming for other requirements – precision weapons mainly, aviation, air defense . . . some suppliers because of some obstacles can’t provide their products.  . . . now we’re making changes – on the order of 30 billion [rubles].  . . . in essence, this is a formality  . . . .  Essentially, we’ve been through the entire agreed part.  The signing itself occurred yesterday-day before yesterday.  Only the United Shipbuilding Corporation contract remains.  Perhaps that’s all.”

Kommersant added Serdyukov’s comment that:

“We, unfortunately, can’t accept the figures which industry gives us.  For the most part, they are simply unjustified.”

Kommersant’s sources maintain, in addition to OSK, contracting with OAK and MIT remains incomplete, and no one’s willing to guess when this still-difficult process will end.

On September 2, Kommersant’s source said part of MIT’s contracts are done, but it would be premature to say the process is complete.

ITAR-TASS added that Sevmash’s contract is now supposed to be signed in mid-September.  The factory reportedly will agree to current prices for its submarines in exchange for some kind of “coefficient” to offset their rising costs starting in 2013.  The wire service also claimed there are now 6 of 13 OSK contracts signed.  And it put the cost of a Borey-class SSBN at a somewhat hard-to-believe 23 billion rubles.  OAK and MIT sources also told ITAR-TASS their contracts aren’t complete.

Vedomosti cited Konstantin Makiyenko on long-term submarine production costing 500 billion rubles.  If that’s eight Borey– and eight Yasen-class boats, it’s a $17 billion contract, basically $1 billion per submarine.  Thirty billion rubles a boat is a lot closer to 23 billion than the 47 or 112 billion that Serdyukov complained about in July.

Despite indications to the contrary, one has to wonder if Serdyukov isn’t very slowly winning his battle with the OPK.  But ultimately, it’s hard to say before we see what gets delivered, when, and how good it is.

State of Play on Mistral

Let’s review recent play in Russia’s possible purchase of French Mistral amphibious ships.

In yesterday’s Nezavisimaya gazeta, Viktor Litovkin said, despite reports Russian-French negotiations are going well, Russia’s announcement of an international tender for construction of large amphibious ships disrupted their exclusive talks.  But Litovkin thinks Russia will ultimately buy Mistral because (he believes) President Medvedev has promised French President Sarkozy.  So, the tender is really only about where to build two Russian-made ships (units 3 and 4), and the answer is Kaliningrad’s Yantar shipyard, according to Litovkin. 

To Litovkin, the remaining issues are the electronic fit on Mistral, and the final price of the deal.  He goes back to General Staff Chief Makarov’s comment that the Russian ships will be exactly like the French ones, down to their comms systems.  The only exception being Russian ones won’t have codes linking French ships into NATO’s command and control network.

On 9 September, Nezavisimaya gazeta picked up on a Le Figaro article concluding that Russia’s tender, coming after six months of negotiations with France, signified trouble.  It wrote that there is more than a little question whether they will remain exclusive talks, even if they continue. 

Technology transfer in the Mistral deal is Moscow’s sine qua non, but this issue may not be resolved on the French side.  Le Figaro believes the U.S. may be able to restrict the export of American-made electronic equipment on Mistral.

Also on 9 September, Rossiyskaya gazeta wrote that cost is the main unresolved issue in Moscow’s negotiations with Paris.  The paper also focused on the Defense Ministry’s insistence on receiving technologies, not just weapons systems and platforms from abroad.

ITAR-TASS reported Defense Minister Serdyukov’s 8 September statement that French cooperation on Mistral might open the way for more bilateral military-technical cooperation, possibly on UAVs.  At the conclusion of his visit to Paris, Serdyukov announced:

“The French side has expressed a desire to work in this area.  We proposed to do this in the form of joint ventures on the basis of our repair plants.  If we succeed on Mistral and we build on such experience, then in the future everything will go in other directions, including in unmanned aerial vehicles.  We have such a proposal from them.”

Also from 8 September, Newsru.com reported Serdyukov saying “we are now waiting on a price” from the French.  He apparently said the French offer would be evaluated with the help of both Russian and foreign experts.

After Serdyukov’s tender announcement, Sarkozy dispatched his military adviser, and former DRM chief, Benoit Puga to meet with Russian Deputy Prime Minister Igor Sechin on 26 August.  Of course, Sechin is Chairman of Russia’s United Shipbuilding Corporation and point man in dealing with the French on Mistral.  They met at Yantar in Kaliningrad.  Puga reportedly told Sechin that ‘2+2’ was acceptable; the first Mistral would be built in a French shipyard in 36 months, the second following 12 months after.  And the third and fourth would be built in a Russian yard.

The French have stayed fairly confident in public about winning the contract.  And most Russian defense commentators still see Mistral as the favorite even if there is competitive bidding for the work.

Tender for Helicopter Carriers May Just Be Formality

Mistral Schematic

Kommersant reports today that United Shipbuilding Corporation (OSK) has gotten the Defense Ministry’s permission to hold an open tender for procurement of helicopter carriers.  The paper concludes the Defense Ministry is refraining from a sole-source purchase of the French Mistral, and will consider similar proposals from OSK’s shipyards.  But the military [at least some military officials] haven’t hidden the fact that they prefer Mistral [but Defense Minister Serdyukov has always maintained they’ve been talking to other suppliers], so the tender could just be a formality. 

OSK President Roman Trotsenko says a special commission from the Ministry of Industry and Trade will conduct the tender, but details are sketchy.  A Defense Ministry source told Kommersant that, without a tender, a deal to buy a helicopter carrier [presumably Mistral] would be considered illegal.  So there won’t be a sole-source buy despite a year of government-to-government talks.

The paper reminds readers of OSK’s recent unsuccessful antimonopoly complaint in regard to the government’s consideration of Mistral.  Although the complaint was not reviewed, it must have had some impact on the decision to compete the helicopter carrier purchase.  Kommersant sources say OSK Board Chairman Igor Sechin also had something to do with it.

Trotsenko says far east shipbuilding plant ‘Zvezda,’ Petersburg’s ‘Admiralty Wharves,’ and Kaliningrad’s ‘Yantar’ will bid for the ships.  ‘Zvezda’ already has a joint venture in place with South Korea’s Daewoo – builder of the Dokdo helicopter carrier.  The OSK President says ‘Admiralty’ and ‘Yantar’ might work with ‘Northern’ shipyard or a foreign builder. 

Kommersant has a letter sent from Sechin to Prime Minister Putin this spring saying not only is Dokdo an alternative to Mistral, but Dutch and Spanish helicopter carriers are as well.

Trotsenko says OSK yards can build a helicopter carrier in 30 months for $500-700 million against a Mistral pricetag of €420-680 million.

Kommersant concludes the tender won’t end the conflict between OSK and the Defense Ministry.  Mistral will remain the latter’s priority.  The paper’s sources don’t know if the military wants to buy Mistral itself or place an order for a new unit in a French shipyard (STX).  OSK hasn’t been able to arrange a cooperative agreement with STX.

Mezhprombank-controlled ‘Northern’ and ‘Baltic’ shipyards will participate in the tender according to a representative of the bank. Kommersant’s sources think Mezhprombank, its owner Sergey Pugachev, and shipyards are the favorites among Russian contenders.  Pugachev was an early supporter of buying French, then building other units in his shipyards.  And, according to Kommersant, the Defense Ministry supports Pugachev.

Alongside Pugachev and Mezhprombank, OSK feels its chances to win the tender aren’t great.  Moscow Defense Brief analyst Mikhail Barabanov also says Mezhprombank yards are the favorites to build Mistral in Russia.  Such a deal’s been reached at a political level between Paris and Moscow, so the tender might just be a formality.  CAST’s Konstantin Makiyenko agrees.  But he thinks Mistral orders will go to ‘Baltic,’ since ‘Northern’ is loaded with frigate and corvette orders.  Meanwhile, OSK would like to buy both yards from Mezhprombank, but the sides haven’t reached agreement on a price.

Buy Two, Build Two

RIA Novosti reported yesterday that the purchase format for Mistral helicopter carriers hasn’t been determined, but a Russian Navy source says a ‘2+2’ variant is possible.

A highly-placed Navy Main Staff representative told the news agency that Russia could buy two and build two of the ships, and such a ‘2+2’ scheme is being discussed in negotiations in Paris.  

Initially, Moscow wanted to buy one and build three under license in Russian shipyards.  But French President Sarkozy mentioned a ‘2+2’ format earlier this year.

RIA Novosti’s source said the two Russian-made ships might be built at Sevmash, Baltic, Yantar, or Northern Wharf.

Pressing the French on Mistral

Vladimir Socor has a good piece describing Russian shipbuilders’ complaints to the Federal Antimonopoly Service (FAS) about the Mistral purchase as another way to press Paris to finalize the deal on Moscow’s terms.  Socor says: 

“In line with the Russian government’s tactics, [Deputy PM and OSK Board Chairman] Sechin is signaling that Moscow could turn to other international shipbuilders, or ultimately to Russian shipbuilders, if France does not sweeten the terms of the Mistral deal for Russia.” 

“Thus, Sechin’s subsidiaries [Yantar and Admiralty] ostensibly seek anti-monopoly action in a case handled by Sechin himself for the Russian government.” 

This points up the bizarre circumstance in which Sechin is negotiating with the French, while his OSK subsidiaries complain about the potential deal. 

But, as Interfaks wrote on Wednesday, FAS says it lacks jurisdiction over the complaint from Yantar and Admiralty.  FAS also says there’s no basis for a complaint since no deal for Mistral has been reached. 

The shipyards argue they’ve been excluded from bidding to build amphibious assault ships for the Navy, and the terms of the competition weren’t publicly announced.  Their complaint seems to have merit since, from the outset, the Defense Ministry went directly after a specific ship and supplier, without issuing general requirements for a ship class. 

According to Interfaks, OSK supports Yantar and Admiralty, and calls the Defense Ministry’s actions ‘obscure.’ Its representatives periodically speak of Mistral like a done deal, but how the deal will proceed remains unclear.  An OSK source says, “And every time such statements deliver a blow to the self-esteem of domestic shipbuilders who know how to make these ships.”  

And, as Socor notes, talks continue also with the Dutch and Spanish [as Defense Minister Serdyukov has always pointed out] and now the possibility of a deal with the South Koreans has been thrown in, further roiling the waters. 

Izvestiya yesterday said OSK President Roman Trotsenko sent a letter to Defense Minister Serdyukov proposing a review of the military’s plans to acquire Mistral.  In its place, Trotsenko suggests building the South Korean Dokdo under license in a Russian shipyard.  He says he can build it in three years, and more cheaply than Mistral by one-third.  OSK has a joint production agreement with Dokdo builder Daewoo. 

Dokdo

The Defense Ministry insists Russian builders demurred when asked if they could build these ships.  Izvestiya doubts Trotsenko’s offer is realistic given the lack of available Russian buildingways.  But the paper concludes the appearance of the letter shows the struggle for the amphibious carrier contract isn’t over.

Serdyukov on Mistral

Defense Minister Serdyukov today said Moscow still plans on acquiring four Mistral amphibious assault ships.  He said Russia is talking not just with France, but also Spain and the Netherlands, about Mistral

According to RIA Novosti, Serdyukov said:

“At present, we’re in pre-contract negotiations on this type of ship with three governments.  They are Spain, the Netherlands, and France.  We plan to sign a contract for four of these ships.”

He also said one ship would be completely foreign-made, but Russian shipbuilders would participate in building the other three.  And the fourth ship will be built, to the maximum extent, in Russia.  

Serdyukov reiterated that the Defense Ministry is working on this acquisition according to President Medvedev’s decision.  And the Defense Minister added: 

“We are now occupied with the issue very seriously.” 

He concluded that the issue of buying the ships will be resolved positively “if there aren’t any revisions, including in the financing question.”  And finally Serdyukov noted:

“We understand now that the Northern and Pacific Fleets need these ships.”

Meanwhile, Baltic Shipbuilding Plant ‘Yantar’ is trying to tout its proyekt 11711 large amphibious ship Ivan Gren as an alternative to buying or building foreign ships.  VPK.name published a version of this story based on an earlier Interfaks report.